{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

# Added together - Added together MVC and MFC are equal to MC...

This preview shows pages 1–2. Sign up to view the full content.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Added together, MVC and MFC are equal to MC, but since MFC is 0, the marginal cost is equal to the marginal variable cost: MVC + MFC = MC MVC + 0 = MC MVC = MC If we can combine a firm's costs and revenues, we can calculate the firm's profits. Using the variables we have been working with, we can represent profit as: Profit = TR - TC TR - TC = q(AR - AC) = q(P - AC) Profit = q(P - AC) Firms will try and maximize their profits, since it is through increasing profits that firms increase their utility. To maximize profits, firms will choose to sell the quantity at which the marginal cost is equal to the marginal revenue. Why is this true? If MC were greater than MR, then the firm would be losing money for each additional unit of product. If MR were greater than MC, the firm would be losing out on extra profit by not making another...
View Full Document

{[ snackBarMessage ]}

### Page1 / 2

Added together - Added together MVC and MFC are equal to MC...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online